for the CEO, Mr. Kartsotis. However, Mr. Kartsotis again refused all forms of compensation for fiscal 2011.Mr. Kartsotis is one of the initial investors in our company and expressed his belief that his primarycompensation is met by continuing to drive stock price growth.

Certain members of the executive management team and other employees regularly attend portions of

Compensation Committee meetings in order to provide information and recommendations to the CompensationCommittee as requested, although the Compensation Committee meets in executive session with onlyCompensation Committee members present when it deems appropriate. The CEO attended a portion of all of theCompensation Committee's formal meetings during fiscal 2011.

Use of Performance Rating

Each Named Executive Officer's performance is evaluated annually in a performance review. The

performance review leads to a performance rating, determined on the basis of both business metrics, which arequantitative measures of our performance and positioning, and position competencies, which are qualitativemeasures of individual performance and talent. Some of the business metrics include net sales, operating expenseleverage, operating income, and gross margin. Some of the position competencies that are evaluated for eachNamed Executive Officer include setting direction and vision for the organization, cultivating corporate culture,managing resources, driving execution, decision making, leading communications, inspiring creativity andchange, resolving conflict and collaborating, identifying and maximizing talent, coaching and developing,scorekeeping, and teambuilding. The overall performance review rating is used in determining base salaryincreases, short-term incentive payouts and the size of any equity grants.

Performance ratings for each Named Executive Officer range from "outstanding," "exceeds expectations,"

"meets expectations," "improvement needed" to "unsatisfactory." The Compensation Committee and CEOreview the qualitative and quantitative measures and subjectively determine the appropriate performance rating.The Compensation Committee and CEO do not assign any specific weights to the various qualitative andquantitative factors nor do they use any formulas to determine the appropriate performance rating. In addition, noone qualitative or quantitative factor is material to the ultimate determination of each Named Executive Officer'sperformance rating.

During the first quarter of fiscal 2011, the Compensation Committee considered each Named Executive

Officer's 2010 performance appraisal in setting his or her base salary and equity incentive awards for fiscal 2011.In addition, during the first quarter of fiscal 2012, each Named Executive Officer's 2011 cash bonus was paidbased on his or her 2011 performance appraisal.

As described in our 2011 annual meeting proxy statement, each of Mr. Kovar, Ms. Pritchard and Mr. Quick

received an "exceeds expectations" performance rating for fiscal year 2010.

For fiscal 2011, each Named Executive Officer was evaluated using the qualitative measures disclosed

above as well as the following quantitative measures of the Company's performance: